Friday, September 30, 2011

Dick Durbin Learns a Lesson

It is so basic, so sensible, so filled with unavoidable logic that it has become a cliche: "There's no such thing as a free lunch."

Democrats, however, don't seem to get that concept. They blather on about profit for free enterprise businesses and almost always affix the adjective "obscene" to the noun. If an enterprise competes in a free market providing a service that customers are willing to purchase and doing so competitively so that their offering attracts business, then Democrats feel obliged to interject government into the process. The results are inevitable.

Take the question of debit cards. We should all have a good understanding of credit cards already. They are a revolving line of credit upon which we pay interest for the convenience of the loans. We may also pay an annual fee for the card depending upon the bank and our credit-worthiness. We should also know that banks process transactions at point-of-sale with the imposition of a small percentage service charge to the merchant. The merchant gains customer convenience because the buyer is not restricted by the immediate availability of real currency in their pocket.

Service is rendered for a fee. The buyer, seller, service provider voluntarily participate because they feel the service is worth it.

Debit cards take the interest on debt out of the equation. It is simply a computerized method of eliminating paper check processing. Merchant service fees remain to allow the banks to make a profit on the service.

Sen. Durbin in the never ending process of interjecting government between the greedy and the ignorant, has masterminded legislation to restrict the amount a bank can charge the merchant. How government knows the cost of the service or the value to the customer is beyond discussion.

Banks Proposing Debit Card Monthly Charge

So with the reasonable opportunity for profit arbitrarily curtailed by Durbin's pandering process, the result is that the bank must find another way to underwrite the costs of doing business. And those grateful chumps who thought they were getting a ham on rye for nothing are now going to realize that the butcher, the baker and the mustard maker are still demanding payment.

Nice work, Dick. Now why don't you drop down to the community college and take a basic business course.

13 comments:

Six said...

I'm already seeing this. I chose Wells Fargo because I needed a multi state bank (california and Utah). I went in the other day to discuss their test market program to increase bank fees on their depositors. I was told it was a direct result of this legislation. I could tell them to pound sand but it seems like this or something similiar is soon going to be nationwide.

Ed Rasimus said...

Six, I can say just one thing. USAA.

an Donalbane said...

"Banks that try to make up their excess profits off the backs of their customers will finally learn how a competitive market works," Durbin warned.

...by having the FedGov step in and dictate their pricing structure?

Uh-huh. How magnanimous of the U.S. Congress to continue to allow private ownership of industry/corporations, just so long as no one gets in the way of the government control.

When the heck did I walk through the looking glass?

We are indeed, as the late Col. John Dean "Jeff" Cooper wrote (borrowing from L.P. Hartley), living in Another Country.

Six said...

I've been considering them but I'm the high priest of procrastinators. No more. I'm now motivated. Thanks Ed.

Anonymous said...

I'll say one thing for Sen Durbin... He doesn't support the business model of a bunch of despicable shysters sitting around a table figuring out ways to screw people out of their hard earned mony.

Why do you think the Banks use to offer free checking???

So they could charge a fee when you overdrafted your account. And if you did overdraft your account and they could make 5 checks bounce istead of one they'd arrange the order so that all 5 checks bounced.

It's about time banking customers paid the actual cost of maintaing their account

Next should be Credit card and debit card fees. The business you pay your money to shouldn't pay a fee for you to use yyour plastic... You Should!

~Leadfoot

Ed Rasimus said...

lead foot, a free market transaction is between a willing buyer and a willing seller. Except for Democrats who are, by definition too stupid to make their own choices.

an Donalbane said...

"Why do you think the Banks use to offer free checking???"

Mr. Foot: For the same reason any other business does special promotions - to attract new business.

The argument that banks return more checks in order to drive up fee income is a contentious one, and ancient. Back in the day, the '80s and '90s when as a loan officer I had decisioning (pay/return; charge/no charge/partial charge) authority on NSF items, the thinking was that returning the large check (typically mortgage/rent or car payment) more negatively impacted the customer than rejecting the payment to the dry cleaners or shoe repair place. Because the human decisioning element was still in place, it's unclear whether the practice really resulted in greater fee income.

The point is, though, that government intrusion is not the answer. Customers vote with their wallets - if one doesn't like the policies of one vendor, choose another whose policies are more customer friendly, as Ed suggests.

I have never had a deposit account with BofA, and don't intend to. But I'd rather see them hoist by their own petard by the marketplace, than have idiot bureaucrats apply a political band-aid, sowing the unintended consequence seeds of another financial crisis ten or fifteen years down the road.

Anonymous said...

You guys rail against the government taking your money to help someone else out but say it's ok for the banks to do it.

ROTFLMAO

~Leadfoot

Ed Rasimus said...

The essential Lead, is compulsion. I choose to use a bank's services. If I think I get value for my dollars, I continue. If I don't I stop.

Confiscation of my earnings through taxation for purposes of redistribution to societal's unproductive, lazy, slugs is not voluntary. I don't choose to give up my money to support a crack-head's fourth child from a different father. I receive no service in return for paying someone with no skills to continue not working for another two or three years.

Is this so difficult? If I don't want an ice-cream cone, I don't buy one. If Starbucks coffee is do expensive I don't drink it. But no one forces me to buy you ice cream or a mocha latte.

Anonymous said...

Ed As a cabdriver in Phoenix I've probably transported 10,000 or more people to their medicall appointments for AHCCCS (medicaid/Medicare) While I've had a couple of crackheads being transported most of them are people like you and me. The ones who surprise me the most are the ones who tell me... "I use to be make 200k a year and pissed and moaned about my taxes being used for this. Then after _____________
(put in whatver disaster can befall a person) I sure am glad to be on this program. Because if I wasn't I'd be dead." They outnumber the crackheads by about 50 to 1 or more.

~leadfoot

Ed Rasimus said...

Lead, you really need to seek some help for your ADD. You somehow never tailor your responses to the topic. WTF does this posting have to do with someone taking a taxi to a medical appointment?

I understand that your talking points for the days agenda might not fit what is being discussed. The proper thing then is to look for a place where that discussion is going on.

Anonymous said...

Oh someone else wrote this, not you?

"Confiscation of my earnings through taxation for purposes of redistribution to societal's unproductive, lazy, slugs is not voluntary. I don't choose to give up my money to support a crack-head's fourth child from a different father. I receive no service in return for paying someone with no skills to continue not working for another two or three years."

Pardon me

~leadfoot

hitman said...

Ed, maybe there was a crackhead driving the taxi on every one of those trips. LMAO